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The University of Southampton
Insurance Law Research Group

Flood insurance PhD studentship

Published: 9 July 2015

The Insurance Law Research Group has been awarded an internal studentship for an excellent PhD student to pursue a research project on flood insurance. The project is cross-disciplinary between Law and Business with joint supervision from both Schools.

Project description

The central concern of this research project will be to explore prospects for insurance industry participation in the complex partnership working that is now required to manage flood risk in the UK. Recent law such as the Flood and Water Management Act 2010, together with regulation such as the Flood Regulations 2009, has already improved cooperation between various public authorities and agencies. Yet the nature and scope of insurance industry involvement in complex partnership working, both within the industry itself, and across a broad range of public and private bodies, still requires academic study and evaluation.

A particular focus of concern will be the industry’s cooperation with government to ensure the success of Flood Re, which, following painstaking negotiations between the industry and government, now offers an untested funding solution for consumers whilst providing no solace for small or large businesses. While many policy issues in relation to Flood Re have been settled and the scheme moves towards implementation, not least in the shape of the definitions, incentives and strictures put in place by the Water Act 2014 and the Flood Reinsurance (Scheme Funding and Administration) Regulations 2015, the need for academic research and analysis on the effectiveness of these arrangements continues unabated, not least as legal and regulatory measures underpinning the risk management mechanism are introduced by the legislator and acted upon by the insurance industry and other risk managers, rendering the multifactorial situation even more complex and precarious.

Requirements for further forms of cooperation relate to the need to reduce a range of uncertainties that are inflating the cost and limiting the availability of flood insurance. Much of this uncertainty relates to climate change. The industry needs to work with scientists and public bodies like the Environment Agency to better understand how climate change may worsen both coastal and inland flooding events around the UK. Yet there is also uncertainty over the extent to which inappropriate land and water management may be exacerbating these problems. New homes and business premises continue to be built in high flood risk areas. This creates new hard surfaces and culverts pre-existing watercourses, adding to the surface run-off that can overwhelm flood defences. Therefore, effective risk-based pricing for flood insurance may often depend on local understandings of how house builders, local authorities and utilities companies are contributing to or helping to mitigate flood risk.

This research project will also explore coordination and knowledge transfer problems within the insurance industry itself. To provide policies which are both affordable and widely available to those affected by the full range of coastal, fluvial, pluvial and groundwater flood risks, the industry needs to improve how it shares claims data, and in particular it needs to improve the granularity of available data for individual streets and properties. It also has a strong stake in making such data available to help flood early warning systems operate more effectively at local level.

The research project will explore, analyse and evaluate the effectiveness of emerging industry/government partnerships. Key to this will be looking at methods used to establish and regulate these working relationships, focusing in particular on how effectively risk ownerships are distributed between the participants.

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